Shares of PDS Limited hit lifetime high post a strong Q3 performance!

With a unique business model, healthy growth momentum and improving financials, PDS Limited is firing on all cylinders

Shares of PDS Limited (erstwhile PDS Multinational Fashions Limited) jumped 1.88 per cent during early market hours on Thursday, February 3, 2022, to touch an intra-day high of Rs 1,944 on NSE. The scrip recorded a fresh 52-week high of Rs 1,944.40 a day before on the bourse. The stock is on a roll, gaining 10 per cent over the last 4 trading sessions.

PDS Limited is one of the world’s largest design-led platforms offering product development sourcing, virtual manufacturing and supply chain platforms. It caters to about 200 plus leading retail and e-commerce brands like Zara, Walmart, Amazon, Mango, Top Shop, Jack Wills, Superdry, Myntra. The company has recently announced its financial results for the quarter and nine months ended December 31, 2021. 

Key performance highlights of Q3FY22 on a consolidated basis are as follows:

• Income from operations stood at Rs 2,232 crore as compared to Rs 1,626 crore in Q3FY21; y-o-y growth of 37 per cent.
• Earnings Before Interest, Tax, Depreciation, and Amortization (EBITDA) was Rs 101 crore versus Rs 76 crore in Q3FY21.
• Profit After Tax (PAT) of Rs 81 crore relative to Rs 59 crore in Q3FY21 (38 per cent growth), with a margin of 3.6 per cent.

The sourcing segment which accounts for 96 per cent of the company’s topline has clocked 34 per cent growth in nine months ended December 2021, with a topline of Rs 5,807 crore. Meanwhile, the manufacturing segment of the company has doubled its topline to Rs 382 crore in nine months ended FY22 because of near full capacity utilization of the facilities.

A strong focus on execution and higher efficiencies has enabled the company to significantly reduce losses by 74 per cent compared to last year. This segment is at the cusp of achieving profitability, with a Loss Before Tax of less than Rs 5 crore in Q3FY22. The company is targeting this segment to be in the green in the next quarter.

Further, the company has successfully achieved a working capital of negative 2 days versus 10 days in the previous quarter. This, along with the company’s strong operating performance, has resulted in net debt reduction by Rs 206 crore in Q3FY22 to Rs 26 crore.

The union budget for 2022-23 was recently announced and Sanjay Jain, Group CEO, PDS Limited has opined his views on the same as follows:  

“The retail and textile industry has been keeping a close eye on the Union Budget to propel them out of the pandemic’s afflictions. The recently announced Production Linked Incentive (PLI) scheme for textiles, with an approved outlay of Rs 10,683 crore for five years signifies a great step forward for the industry. Although there has been a 41 per cent increase in textile exports from April-December 2021 against last year, the measures taken can further help the sector to be more competitive with global economies. Additionally, the exemptions allowed on imports based on export performance in handicrafts, garments, and leather will work well for the industry. India’s textile industry must aim for US$ 65 billion in exports in the next five years, especially with the ‘China Plus One’ sentiments providing India a commendable position as global companies look at sourcing and manufacturing destinations outside of China.”   

With a unique business model, healthy growth momentum and improving financials, PDS Limited is firing on all cylinders. Investors should keep this company on their radar over the coming quarters.